“Lenders may have an incentive to work things out with the company because a lot of Gramercy’s business is intertwined with theirs,” said Ben Thypin, senior market analyst at New York- based research firm Real Capital Analytics Inc. “A potential pre-packaged bankruptcy stays with that theme of a coordinated restructuring effort.”

The sales volume in the first quarter of 2010 was roughly the same as the fourth quarter of 2009, which isn’t a bad thing, according to Ben Thypin, senior market analyst at Real Capital. In that quarter, the apartment sector saw the greatest spike in transactions among the commercial property types.

“The fourth quarter of 2009 was big because it was the fourth quarter,” he says. “There is always more activity then because firms want to get in deals before the year ends.”

....But some of the hard-hit markets had product moving, too. RCA reported that distressed properties constituted 29 percent of properties sold in the first quarter, which was about twice the distressed sales in other property types. Phoenix, Atlanta, and Tampa, Fla., were among the 10 most active markets, though Las Vegas saw no major sales. ARA’s Phoenix office, for instance, saw its volume rise more than 280 percent in the quarter.

And for sales outside of those markets? Thypin said the drive was still to quality. “The second tier of the market—the Class B property segment—still has a ways to go before the apartment market really recovers,” Thypin says. “People need to start buying those properties if we’re going to see increases in pricing and volume overall.”

We're seeing a lot of these 'strategic defaults,' " said Ben Thypin, senior market analyst with Real Capital Analytics, a commercial real-estate research firm in New York. "Beacon could probably pay the mortgage, but the properties are worth less now, and they don't want to make payments based on outdated values."

The reason for a lack of distress-related activity is simple. Most owners have tried whatever means possible to avoid selling hotels because values have fallen so far that their investment would be wiped out. "People realize it's a dumb time to sell," says David Lynn, who heads research as a managing director of ING Clarion Partners LLC, a real estate private equity and investment management firm. "If they can hold on, they're going to do that."

Real Capital Analytics (RCA), a New York-based commercial real estate research firm, points to Great Atlantic Management , an owner based in Virginia Beach, Va., who RCA says had a massive, 19-property, 4,000-unit portfolio of Virginia properties on the market at press time.

But Thypin isn’t necessarily ready to declare just yet that there’s a thaw in portfolio offerings. As of press time, neither RCA nor New York-based Reis —companies that track apartment transactions—had seen enough large deal activity to declare a trend.

“As for portfolios coming to market, anecdotally, I would have to agree, but I think we need to wait until the end of the quarter to give out any definitive numbers,” Thypin says.

Ben Carlos Thypin

I am currently the co-founder of Quantierra, the world's first data driven real estate brokerage and investment manager. In my former life as Director of Market Analysis at Real Capital Analytics, I worked with press outlets large and small to provide them with great data and insightful commentary. Here are some of the results of this collaboration. For the rest, please check out the News Archive.